Giving U.S. companies a tax break for bringing home profits held
overseas likely won’t create more jobs or spur domestic investment, an
influential conservative think tank will argue in a report to be
released Tuesday.
In a break from many Republican lawmakers and a host of major U.S. companies including Google Inc., Apple Inc., Pfizer Inc. and Microsoft Corp., the Heritage Foundation said in a new study that a repatriation tax holiday would not motivate companies to hire new workers.

The report from the conservative think tank, often aligned with House
Republicans, could slow recent momentum for a repatriation tax holiday,
under which U.S. multinationals would bring home profits held abroad at
a lower tax rate. Congress previously passed a repatriation tax break
in 2004, billed as a one-time remedy, but lawmakers from both parties,
eager to bring down the unemployment rate, have suggested repeating the
effort.

Rep. Kevin Brady (R., Texas) introduced a bill in
May that would tax overseas corporate profits brought back to the United
States at a roughly 5% rate, rather than the top corporate rate of 35%.
While the tax break would likely prompt companies to bring home
overseas profits, those companies wouldn’t use the extra cash to hire
workers, launch mergers or make other new investments they wouldn’t
already undertake, argue senior fellow J.D. Foster and senior policy analyst Curtis Dubay.

The companies that would benefit from a repatriation tax holiday
aren’t currently squeezed for capital, so an influx of funds won’t alone
be motivation enough to create new jobs, the pair write. “The
repatriation holiday would have little or no effect on investment and
job creation, the key to the whole issue, simply because the
repatriating companies are not capital-constrained today.”...MORE